‘We know that N.Z. doesn’t subsidise’

Press, 21 November 1986, Page 11

‘We know that N.Z. doesn’t subsidise’

New Zealand’s removal of agricultural subsidies has made little difference to United States trade policies towards this country, according to officials in Washington.

“We have never looked on our friends in New Zealand as being guilty of subsidy,” the head of the United States Department of Agriculture’s Foreign Agricultural Service, Mr Thomas Kay, said. The Reagan Administration has tried to minimise the effects the disposal of stockpiled commodities would have on the world market

“We have been very careful not to hurt New Zealand,” Mr Kay said. New Zealand’s meat trade was likely to suffer until most of the 200 million pounds of excess red meat was discounted to Brazil, which was not one of this country’s traditional markets.

But Mr Kay said there will be some fallout for all countries involved in world-wide agricultural trade whether they are “non-subsidisers” or not. “Whenever there is a shoot-out along the Main Street, some innocent passers-by are apt to get hurt,” he said. The head of the New Zealand Trade Commission in Washington, Mr David Kininmonth, agrees that the U.S.D.A. is trying to avoid hurting “non-sub-sidisers” through its export enhancement programmes.

Instead it is trying to target “manifest subsidisers” such as the E.E.C., he said. Measures such as the 20 per cent countervailing duty on New Zealand lamb are recognition that New Zealand is uniquely suited to livestock production, which gives a comparative advantage over other countries including the United States. Removal of subsidies or services by the New Zealand Government during the last two years has not affected that preception. Any subsidies such as SMPs have been regarded as “a deficiency payment applied after the event,” reflecting New Zealand’s dependence on international markets. Mr Kininmonth said the basic economic policy instituted by the Labour Government has won New Zealand attention in the United States.

Leading members of the Reagan Administration see New Zealand as a “major example” of what other counteies need to do to restructure their economies, he said.

“A number of them are watching very closely what they regard as the New Zealand experiment, although they wouldn’t perhaps state it in those terms.”